The Ways and Means Committee of the House of Representatives unveiled the American Families and Jobs Act. It is a tax proposal endorsed by Republicans that has provisions for relief and an increase in the standard deduction for all taxpayers, regardless of income level.
The act, which consists of three independent laws (the Build It in America Act, the Small Business Jobs Act, and the Tax Cuts for Working Families Act), has little chance of passing through a divided Congress.
Tax Bills Face Uphill Battle in Divided Congress
Democrats who are opposed to the plan have shown some reluctance because they believe it doesn’t go far enough to help families with lower incomes.
The standard deduction, which is what most Americans use for their tax returns, was roughly doubled by the 2017 Tax Cuts and Jobs Act (TCJA).
The guaranteed deduction incentive is increased for 2024 for Working Families Act to $4,000 for joint filers or surviving spouses, $3,000 for heads of household, and $2,000 for individual taxpayers.
According to a report on the legislation from the Joint Committee on Taxation of Congress, the amount of the bonus guaranteed deduction for tax years beginning in 2024 would be $2,000 for an unmarried person and a married person filing a separate return, $3,000 for a head of household, and $4,000 for married people filing a joint return and a surviving spouse.
The sums would be updated for inflation for taxes beginning in 2025.
Accounting Today explained that the bonus guaranteed deduction will not be available for taxes beginning after 2025.
Democrats have already responded to the bill. According to the University of Pennsylvania’s Penn Wharton Budget Model initiative, although roughly two-thirds of American households would gain from a tax decrease in 2024, those in the bottom income quintile (those making less than $19,500) and those in the top 1% would typically not profit.
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Guaranteed Deduction Bonus Falls Short for Economically Vulnerable Families
Richard Neal (D-Mass.), the leading Democrat on the Ways and Means Committee, believes that the guaranteed deduction incentive does not help economically disadvantaged American families.
For married couples filing jointly in 2023, the standard deduction will increase by $1,800 to $27,700.
The standard deduction will increase to $20,800 for heads of households and $1,400 to $13,850 for single taxpayers and married persons filing separately for the tax year 2023.
MarketWatch, the standard deduction was dramatically boosted by the TCJA in 2017, and almost 90% of 2021 individual income tax filings used the standard deduction instead of itemizing deductions.
In addition to the present standard deduction rates, this additional bonus deduction would be available.
